City home owners place higher values on healthy rivers

Wednesday 25 Jan 2017

Many city people enjoy living near healthy,
natural rivers, but real estate valuers, town planners and economists find it difficult
to place an economic value on this desire.

While trying to put a value on the enjoyment of nature, an economics
researcher at Charles Sturt University (CSU) in Bathurst has found that urban residents
in houses near more natural waterways with more vegetation and less modified
banks were willing to pay extra for these features.

"This was reflected in higher sale prices and rent paid by residents
in this environment compared to those living near more disturbed waterways,"
said Mr Buyani Thomy, who is completing a PhD based on this research with CSU's
Faculty of Business, Justice
and Behavioural Sciences.

"After accounting for multiple factors that affect selling
prices, my research showed that improving the condition of both river channels
and vegetation along rivers also leads to higher house prices than when only vegetation
was improved."

"People demonstrated that they don't want to live in a 'bare
and barren' ecological state which has little vegetation and highly modified
channels. So any improvements will produce the highest gains in property
prices."

Mr Thomy found that there were minimal rises in house prices
once the river and vegetation had already been modified and further
modification was carried out. However, residents were found to place a higher
premium for waterways with the highest quality with unmodified channels and
good condition vegetation.

"Therefore, planners and developers should seek to improve
riparian areas including removing the traditional concrete on banks and replanting
native vegetation to get the best return on investments and development
policies, particularly in cities."

Mr Thomy's research was focused in southern Sydney along the
Cooks River and the Georges River catchments under the supervision of Professor Mark Morrison and Dr Roderick
Duncan from CSU's Institute for Land,
Water and Society. They collaborated
with the City of Canterbury Bankstown Council, Fairfield City Council, NSW Local
Land Services (Greater Sydney), Sydney Water, CSIRO and Virginia Tech
University in the USA.

"The health of
rivers running through urban areas is important for sustainable living, but to
date there has been a lack of value estimates available to aid communities in
making decisions about improving urban river health," Professor Morrison said.

"Buyani's project
has applied what are known as hedonic pricing techniques to identify how
household recreation and amenity values change with the health of an urban
river and the economic benefit for communities bordering the river. It is one of the first studies
internationally to demonstrate the value of improving river channels as well as
riverside vegetation."

Mr Thomy
said previous studies on valuing
changes in river health in Australia were carried out in agricultural areas or
in areas of high biodiversity, not in urban areas where most people live in Australian.

"I
wanted to address this imbalance and assist in investment priority setting. I
am using economics to measure the value people place on the recreation and
natural amenities they get from urban waterways. Our findings showed that local
residents do have a preference for proximity to healthy urban waterways and
they are paying more to live nearby the healthy waterways," Mr Thomy said.

"I
also extended this approach to include property renters and used multiple
measures of riverine health. This is particularly important as the values of
renters tend to be neglected in similar studies for environmental amenities.

"I
found renters also preferred healthy urban waterways but they placed a lower premium
on the improvements than homebuyers."

Mr Buyani Thomy
has completed his PhD studies as part of a larger research project titled 'The
Value of River Health to the Residential Community of the Georges and Cook
River Catchments'. For interviews with My Thomy at CSU in Bathurst, contact CSU
Media.

A previous story outlined the size and scope of Mr
Thomy's project.The project, 'The Value of River Health to the Residential
Community of the Cooks and Georges River Catchments' (2013-2015), was funded by
the City of Canterbury Bankstown, Charles Sturt University, the
Commonwealth Scientific and Industrial Research Organisation (CSIRO), Fairfield
City Council, NSW Local Land Services (Greater Sydney), and Sydney Water.